Explainer: How will the Supreme Court reshape US opioid epidemic relief?

WASHINGTON, Dec 3 (Reuters) – The U.S. Supreme Court on Monday ruled against the legality of a nearly $6 billion bankruptcy settlement involving Purdue Pharma, the maker of the powerful and highly addictive painkiller OxyContin, which played a key role in the case. The court is scheduled to hear arguments regarding sex. The opioid epidemic in this country.

If a judge allows the deal to proceed, it could potentially funnel billions of dollars to addiction treatment and other relief efforts. The settlement also protects the Stamford, Conn.-based pharmaceutical company's wealthy Sackler family from lawsuits brought by opioid victims.

Here we discuss the settlement and its consequences.

How will this settlement help those affected by opioids?

The opioid epidemic has caused more than 500,000 overdose deaths in the United States over two decades. Purdue introduced OxyContin in 1996 and aggressively marketed and promoted it. Various plaintiffs in thousands of lawsuits against Purdue have argued that OxyContin started the epidemic. As a result of the lawsuit, Purdue filed for Chapter 11 bankruptcy in 2019 to settle its debts.

The City of Purdue has reached bankruptcy settlements with creditors, including various state attorneys general, local governments, and the Criminal and Civil Divisions of the U.S. Department of Justice. Under the agreement, Purdue will become a nonprofit organization and dedicate its assets to addressing the harm of opioid addiction in the United States.

A U.S. bankruptcy court approved the reorganization plan in 2021. It was amended to include more money from the Sacklers in 2022 after eight state attorneys general and the District of Columbia successfully appealed the bankruptcy court's approval.

The revised agreement is supported by all financial stakeholders in the case, including all state attorneys general, but opposed by the Justice Department's bankruptcy watchdog and some individual opioid plaintiffs.

Under the deal, the Sacklers will pay up to $6 billion to a trust that will be used to settle lawsuits brought against Purdue by states, hospitals, addicts and others.

A group of more than 60,000 people who filed personal injury claims stemming from exposure to Purdue's opioid products told the Supreme Court that it supports a settlement that includes legal immunity for members of the Sackler family.

What role did the Sacklers play in the opioid crisis?

The lawsuit against Perdue and the Sackler family accuses them of fueling the opioid epidemic through the deceptive marketing of painkillers. The company pleaded guilty in 2007 and 2020 to charges of misrepresentation and fraud related to the marketing of OxyContin.

The Sacklers' actions “contributed to the massive overuse of OxyContin and other opioids in this country,” said Joshua Silverstein, a law professor at the University of Arkansas at Little Rock.

Members of the Sackler family have denied any wrongdoing, but expressed regret that OxyContin “unexpectedly became part of the opioid crisis.” They said in May that the bankruptcy settlement would provide “significant resources to people and communities in need.”

How do the Sacklers plan to use bankruptcy as a shield?

Under the settlement, owners of Purdue's Sackler family would receive forgiveness in exchange for payments of up to $6 billion to resolve thousands of lawsuits, even though they are not bankrupt themselves. . They accomplish this through so-called non-debtor releases (also known as third-party releases).

“The basic idea is that the Sacklers are giving Purdue Pharma a lot of money in exchange for extinguishing their liability for the opioid crisis without having to declare bankruptcy,” Silverstein said. said.

Congress initially authorized the release of non-debtors in connection with asbestos litigation. Its use is being expanded by companies seeking to use such releases as bargaining chips.

President Joe Biden's administration has argued that the Purdue settlement is an abuse of the bankruptcy protection system, targeting debtors in “financial distress” rather than people like the Sackler family. The administration also said members of the Sackler family withdrew $11 billion from Purdue before agreeing to contribute $6 billion to the opioid settlement.

Why are U.S. trustees opposing bankruptcy settlements?

The U.S. Trustee is a position within the Department of Justice that performs administrative functions, plays an oversight role, and in some cases takes policy positions, such as in the Purdue Pharma bankruptcy case.

The watchdog is appealing a lower court ruling that approved the settlement, but opposes using bankruptcy law to provide the kind of sweeping legal protections sought by the Sacklers. . “The Court of Appeals' decision is a roadmap for corporations and wealthy individuals to exploit the bankruptcy system to avoid large-scale tort liability,” the trustees told the Supreme Court.

Purdue accused the U.S. Trustees of “single-handedly delaying billions of dollars that should be directed toward victim compensation, quelling the opioid crisis in communities across the country, and providing overdose relief drugs.”

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